Glossary

Exceptions limit the application of an exclusion such that it does not apply to the described circumstances. For example, an exception to the commercial general liability (CGL) policy's watercraft and aircraft exclusion leaves coverage in place for liability assumed in an insured contract.

Excess in an insurance context refers to insurance to cover unanticipated or catastrophic losses. Excess coverage can be specific excess, which begins paying when any single claim reaches the preestablished retention, or aggregate excess, which begins paying when the cumulative cost of all claims reaches the preestablished retention.

Excessive fee claims are made against fiduciaries responsible for overseeing 401(k) plans for allowing the outside administrator to charge excess fees. Such claims allege that the fee charged by the outside administrator of the plan is substantially higher than the average fee (usually stated as a percentage of total funds held by a given 401(k) plan). When multiplied out during a substantial period of time (i.e., from 20 to 30 years), a fee that is merely 1 or 2 percent higher than the normal fee can reduce a 401(k) plan holder's balance by many thousands of dollars. And when a group of employees bands together in a class action alleging that an employer's 401(k) plan charged an excessive fee, damages claimed can exceed $100 million.

An excess ad damnum letter is a letter sent to each defendant in a lawsuit who is covered under the liability policy, advising that the amount sued for exceeds the policy limits. In certain jurisdictions, the amount sued for is open or provisional, and, therefore, a letter will need to be sent to each defendant on all claims pending in litigation.

Excess and surplus (E&S) lines insurance is any type of coverage that is placed with a nonadmitted insurer (an insurer not licensed to do business in a given state) but legally allowed to provide coverage under certain conditions. Risks placed in E&S lines may have characteristics that make them difficult to place in the standard market (e.g., adverse loss experience or unusual or high-hazard exposures). Captives sometimes qualify as E&S companies. Both primary and excess coverages can be purchased through the E&S market.

Excess cover is coverage for which limits apply once the amount of primary insurance under another policy has been paid.

Excess (XS) insurance is a policy or bond covering the insured against certain hazards and applying only to loss or damage in excess of a stated amount or specified primary or self-insurance. It is the portion of the amount insured that exceeds the amount retained by an entity for its own account.

Excess interest is interest credited to the policy account of an insured in excess of the minimum amount stated in the policy.

An excess liability "follow form" policy is excess insurance that is subject to all of the terms and conditions of the policy beneath it. In the event of a conflict, it is the underlying policy provisions that take precedence. Many excess liability policies state that they are follow form except with respect to certain terms and conditions. When this is the case, the excess liability policy is not truly on a follow form basis.

An excess liability policy is a policy issued to provide limits in excess of an underlying liability policy. The underlying liability policy can be, and often is, an umbrella liability policy. An excess liability policy is no broader than the underlying liability policy; its sole purpose is to provide additional limits of insurance.